Trust fund could help fi­nance EGC pro­posal

Jamaica Gleaner - - OPINION & COMMENTARY -

THERE ARE few, if any, rec­om­men­da­tions con­tained in the broad out­lines of­fered by Michael Lee-Chin’s group to drive sus­tain­able growth in Ja­maica with which rea­son­able peo­ple would dis­agree.

In­deed, Mr Lee-Chin, the bil­lion­aire banker, and the mem­bers of his Eco­nomic Growth Coun­cil (EGC) im­plic­itly con­cede that macroe­co­nomic sta­bil­ity is not the sine qua non for sus­tain­able eco­nomic growth, but were not com­pelled to dwell on this is­sue, ex­cept for a few mi­nor points of pol­icy de­tail, to en­cour­age the Hol­ness ad­min­is­tra­tion to en­ter a suc­ces­sor agree­ment with the In­ter­na­tional Mone­tary Fund when the ex­ist­ing one ex­pires next year.

There is logic to the ab­sence of em­pha­sis on this point: Ja­maica, hav­ing been at the precipice, has been hav­ing a good go over the past four and a half years at manag­ing its fis­cal af­fairs. It has run a cur­rent ac­count sur­plus of more than seven per cent of GDP, con­trast­ing with the re­duc­tion of its debt from 150 per cent to 125 per cent of GDP; the cur­rent ac­count deficit has slumped from 13 per cent of GDP to un­der two per cent; the Govern­ment, for the first time in nearly two decades, is about to bal­ance its Bud­get; and in­vestor con­fi­dence is high. But while the nee­dle has be­gun to move on growth, th­ese gains, it is felt, are not them­selves suf­fi­cient to gen­er­ate GDP ex­pan­sion at the pro­posed sus­tained five per cent level pro­jected by Mr Lee-Chin by 2020.

So, the EGC has pro­posed a num­ber of other in­ter­ven­tions, most of which, such as cre­at­ing an ef­fi­cient and re­spon­sive pub­lic bu­reau­cracy, have long been on the agen­das of Ja­maican ad­min­is­tra­tions, but over which they dithered, mainly be­cause of an ab­sence of con­sen­sus and a lack of po­lit­i­cal will. Sig­nif­i­cantly, how­ever, Mr Lee-Chin’s team high­lighted im­prov­ing cit­i­zen se­cu­rity and safety “as the sin­gle most im­por­tant growth-in­duc­ing re­form that Ja­maica can un­der­take”.

That dec­la­ra­tion makes sense. Al­though mur­ders are down around 30 per cent from six years ago, the homi­cide rate, hov­er­ing at 45 per 100,000, is among the world’s worst. Wor­ry­ingly, the re­cent trend sug­gests a grow­ing in­ca­pac­ity to curb vi­o­lent crime in the west. This is hap­pen­ing in an en­vi­ron­ment where most mur­ders are never solved and few killers are ever brought to court, much less con­victed. At the same time, Ja­maica has a snail-pace le­gal sys­tem, with its courts clogged with nearly half a mil­lion cases. Yet, most eco­nomic analy­ses sug­gest that low­er­ing the mur­der rate to low dou­ble dig­its would in­crease its GDP by up to six per cent if it could bring its homi­cide rate to a low of 10/100,000, or less.

RE­FORM INI­TIA­TIVES

On this front, Mr Lee-Chin out­lined a range of re­form ini­tia­tives that ought to have the sup­port of the po­lit­i­cal Op­po­si­tion, given that they es­sen­tially echo ideas and pro­grammes that were touted, and in some in­stances, im­ple­mented by Peter Bunt­ing and Mark Gold­ing, re­spec­tively, the min­is­ters of na­tional se­cu­rity and jus­tice in the pre­vi­ous govern­ment. The dif­fer­ence here is the call for co­or­di­na­tion and over­sight. Ex­cept for the sug­ges­tion to “di­vert” J$500 mil­lion a year spent by the con­stab­u­lary on rent to con­struct pur­pose-built po­lice sta­tions, Mr Lee-Chin’s group did not cost, or pro­pose how th­ese ini­tia­tives are to be funded. The Govern­ment, clearly, will have to re­al­lo­cate re­sources, for which it has to build con­sen­sus.

On the way for­ward, es­pe­cially for the sus­tained fi­nanc­ing of a mod­ern and ef­fi­cient ju­di­cial sys­tem, we sug­gest that the ad­min­is­tra­tion bor­row, with the ap­pro­pri­ate tweaks, the model em­ployed by re­gional states for the Caribbean Court of Jus­tice: the estab­lish­ment of a self-sus­tain­able trust fund. Tak­ing into ac­count its debt-sus­tain­abil­ity obli­ga­tions, Ja­maica could put up seed cap­i­tal and call on in­ter­na­tional part­ners for as­sis­tance.

Newspapers in English

Newspapers from Jamaica

© PressReader. All rights reserved.